Liberal Democrats vow to cut income tax

Danny Alexander: lowering tax. Picture: PA

The Chief Secretary to the Treasury made the pledge as he attempted to out- manoeuvre Conservatives who are keen to claim the policy for themselves. Saying that the economic recovery would not have happened without the Lib Dems, Alexander tried to steal the Tories’ thunder on a policy that figures in both parties believe could alleviate the cost of living crisis.

Alexander, who will lead the Lib Dem negotiations in future coalition talks, confirmed that increasing the threshold will be written into the party’s manifesto for the contest and a rise of at least £500 – giving a tax cut of £100 – would be earmarked for the first Budget after the general election.

The Lib Dems have made raising the point at which people start paying income tax to £10,000 a priority in government, and Alexander indicated pressure was mounting for Chancellor George Osborne to signal a further rise to £10,500 in this month’s Budget.

In his keynote speech to the Lib Dem spring conference in York, Alexander said: “I can tell you that a top priority in any negotiation will be our aspiration to raise the personal allowance dramatically again in the next parliament. To raise it to £12,500.

“That would be a further tax cut for working people of £500. A two-term Lib Dem government would then be delivering a tax cut for working people of £1,200 – that’s £100 a month.

“And we would start the process as soon as possible by delivering a tax cut of at least £100 in the first Budget of the new parliament.”

There have been reports that senior Conservatives have themselves been drawing up plans to raise the personal tax allowance to £12,500 and make it a central 2015 election pledge in a bid to outflank the Lib Dems.

Lib Dem party leader and Deputy Prime Minister Nick Clegg has called for this month’s Budget to be used to signal a “workers’ bonus” £100 tax cut by raising the threshold to £10,500.

Alexander, the Chancellor’s deputy in the Treasury, said: “Every day in the run-up to the Budget, Nick and I are drawing strength from our party’s growing campaign to press for a further rise in the allowance to £10,500.”

As well as claiming credit for the rise in the personal tax allowance, Alexander stated that the economic recovery was a Lib Dem achievement.

He said: “Britain is on its way back. We know that governments don’t create jobs and growth.

“It is the hard work of millions of people and hundreds of thousands of businesses that does that – but government can and must create the right conditions for this to happen.

“Be in no doubt that the right conditions for this recovery would not have happened without the Liberal Democrats in government.

“Every job that’s been created, every apprenticeship opened up, every pension boosted has our Liberal Democrat DNA running through it.”

Shadow chief secretary Chris Leslie said: “Danny Alexander can make all the manifesto promises he likes, but nobody will believe a word the Lib Dems say.”